Half a million Australians take cash out of their supers to get through the coronavirus crisis – despite warnings it could be a ‘terrible’ mistake
- 456,000 applications to take cash out of superannuation have been approved
- The average amount of each withdrawal is around $8,000, totalling $3.8billion
- Applicants can take $10,000 of their super between 20 April and 30 June
- 275,000 businesses have already signed up to be part of the JobKeeper scheme
- Here’s how to help people impacted by Covid-19
Half a million Australians have taken money out of their superannuation to get through the coronavirus crisis.
Under new rules to help people through the crisis, Australians can take $20,000 out of their retirement funds tax-free.
Eligible applicants can take $10,000 of their super between 20 April and 30 June 2020 and a further $10,000 until September 24.
On Thursday, Treasurer Josh Frydenberg revealed that 456,000 applications to cash out have been approved by the ATO.
The average amount of each withdrawal is around $8,000, totalling $3.8billion, he said.
Australians have been warned that taking cash out of their superannuation is a ‘terrible idea’
Australian Prime Minister Scott Morrison and Australian Treasurer Josh Frydenberg arrive for a press conference regarding coronavirus on 23 April
The Treasurer also revealed that 275,000 businesses have already signed up to be part of the JobKeeper scheme after applications opened on Monday.
He said that $3billion has been handed out to 177,000 businesses as part of the government’s business grant scheme.
It was also revealed that 6.8million people have received the government’s $750 handouts, totalling $5.1billion.
Experts have warned that taking money out of your superannuation should only be done in absolute emergencies.
Graham Cooke of financial comparison website Finder told Daily Mail Australia: ‘Taking cash out of your super is a terrible idea.
‘For some people it will be necessary in an emergency situation – but they should only take the minimum that they need.’
This is because retirement savings grow cumulatively over time so any money taken out now may significantly reduce the value of your super when you retire, he said.
Mr Cooke said the benefits of the cash being tax free are outweighed by the likely loss over time from cashing out.
Under new rules to help people through the coronavirus crisis, Australians can take $20,000 out of their retirement funds tax-free over the next two years
Any money taken out now may significantly reduce the value of your super when you retire, experts have warned
He also warned that now is a bad time to be cashing out because the stock market has been hammered by the coronavirus crisis.
‘Supers have been heavily hit because of the downward movement of the stock market so now is not a good time to be removing cash,’ he said.
Super funds are typically 50 per cent shares, 20 per cent bonds and five per cent cash with the rest invested in ‘alternatives’ that typically include infrastructure assets like toll roads, airports and commercial office buildings.
Last month research group SuperRatings estimated balanced super funds, mainly invested in growth assets, had dived by 10 to 12 per cent since the share market peaked on February 20.
SuperRatings CEO Kirby Rappell also warned against cashing out.
‘If we look back over the past 12 years typically we’ve found that is has not been a great bet the move out into cash,’ he told Daily Mail Australia.
‘People need to be cautious generally to switch into cash.’
SuperRatings calculated that $100,000 invested in cash during the low point of the GFC would be worth $90,000 now because prices have increased.
But $100,000 invested in a balanced super fund at the same point in 2008 would be worth $121,000.